As the Dollar-Index (DXY) had a very good run in recent days, the Euro slipped below the 1.0800 support against the Dollar finally. If things do not change dramatically, the Euro should remain under pressure until the next FED meeting (04may, Central Bank Calendar). The Dollar is backed by comparatively high US Treasury Yields (10yr at 2.80%) and a weaker risk sentiment for now. The reality check next week Wednesday will be very interesting. Expectations are quite high already and I have even read about 75 basis points. That seems not realistic but any rate hike smaller than 50 bp will disappoint the market.
The DXY is starting to look stretched but there is still room for 1% to 2% more upside with two major highs left at 103.82 respectively 102.99. Nevertheless, I would rather reduce Dollar longs here if I had any. The big 100 treshold should support the Dollar for now.
(weekly chart)
The next big EURUSD support comes in at 1.0636 (23mar2020 “Covid-Low”) and chances are good that we will see a test rather sooner than later. With respect to the DXY which could still easily run 1% to 2% a realistic downside target for the currency pair could be the 1.05 level. Short-term resistance comes in at 1.0739 (hod) and 1.0757 (low of 14apr).
(daily)
(monthly)
Good luck,
Sebbo